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Supply Chain Management


Table of Content

Sr. No. Content Page No
1. What is Agility 3
2. The Agile Supply Chain 3
3. About: Flipkart 5
4. Supply Chain Management
System at
5. Order Processing at Flipkart 8
6. Future for E-Commerce 11

7. References 12


What is Agility?

Agility is a business-wide capability that embraces organisational structures, information
Systems, logistics processes and, in particular, mind-sets. A key characteristic of an agile
Organisation is flexibility. Indeed the origins of agility as a business concept lie in
Flexible manufacturing systems (FMS). Initially it was thought that the route to
Manufacturing flexibility was through automation to enable rapid change (i.e. reduced
set-up times) and thus a greater responsiveness to changes in product mix or volume.
Later this idea of manufacturing flexibility was extended into the wider business context
and the concept of agility as an organisational orientation was born.

The Agile Supply Chain

An agile supply chain is a chain of supply that is capable of responding to changing needs in
a manner that expedites delivery of ordered goods to customers. In general, supply chain
agility is a trait that many companies look for when selecting vendors, since a retail supply
chain that is flexible and able to quickly respond to emergency needs can in turn help the
business respond more efficiently to its customers. Along with flexibility, speed and
accuracy are also hallmarks of a truly agile supply chain.

In order to understand the benefits of an agile supply chain, it is first important to
understand the components found in any type of chain of supply. These include elements
such as order collection and processing, inventory of materials to create the goods used to
fill orders, packaging and transport of finished goods, and the quality of customer
service that is exhibited throughout the process from the point of sale to the actual delivery
and beyond. In order for the supply chain operations to be considered agile, each one of

these components must be managed efficiently, and organized in a manner that makes it
possible to adapt to changing circumstances.
With an agile supply chain, vendors are able to respond to shifts in customer needs with
relatively little time required. For example, if a client has already placed a sizable order but
finds that the items are needed a week before the projected delivery date, a vendor with a
truly agile supply chain will be able to accommodate that change in the customer’s
circumstances, at least in part. Working together, the vendor and the customer develop a
strategy to allow the delivery of as much of the order as possible within the new time frame
required. At times, this may require creative thinking on the part of the vendor, as well as
the demonstration in some flexibility in terms of scheduling production time, selecting
shippers, and generally looking closely at each step in the order fulfilment process to find
ways to minimize the time needed to successfully complete those tasks and comply with the
customer’s request.

It is important to note that while an agile supply chain is a very attractive feature,
attempting to be too flexible can actually damage a business. For this reason, many
companies do initiate policies and procedures designed to prevent situations that could
endanger the overall operation and its relationship with the entire client base. This
sometimes means invoking order minimums that must be in place in order to qualify for
expedited shipping, assessing additional charges for early delivery, or similar deterrents that
prevent customers from constantly expecting service levels beyond what is considered



Sachin Bansal & Binny Bansal graduated from IIT-Delhi with a degree in Computer
Engineering was working before quitting and launching their own company Flipkart was launched in 2007 with the objective of making books available to
everyone who had internet access initially they used „word of mouth‟ marketing to
popularize their company. A few months later, the company sold its first book on Wood‟s Leaving Microsoft to change the World. Along with time, it later
diversified across various categories including and in 2010 branched out to selling CDs,
DVDs, mobile phones and accessories, cameras, computers, computer accessories and
peripherals, and in 2011, pens & stationery, other electronic items such as home appliances,
kitchen appliances, personal care gadgets, health care products etc. Further in 2012, Flipkart
added A.C, air coolers, school supplies, office supplies, art supplies & life style products to its
product portfolio.
Flipkart is rapidly expanding its network of warehouses, distribution centres, procurement
operations and 24/7 customer support teams. The company has its own delivery network
in 37 cities and is set to expand this in the current financial year. With a team of around
4,800 members, the company operates from offices and warehouses in seven Indian cities.
Today, as per Alexa traffic rankings, Flipkart is among the top 20 Indian Web sites and has
been credited with being India's largest online bookseller with over 11 million titles on offer.
Flipkart broke even in March 2010 and claims to have had at least 100% growth every
quarter since its founding. It has registered sales of nearly 2.5 million items across all
categories and sells more than 20,000 units per day or 14 items per minute. With path-
breaking features like Cash/Card on Delivery, 30 Day replacement policy and EMI options.


Supply Chain Management System at

The role of logistics in the successful functioning of an e-commerce venture is indispensable.
Here are some Best Practices of the Supply Chain of Flipkart:
Building the Suppliers base-
The Company has established a network of more than 500 distributors and only stocks
frequently ordered items. Items like the 'Long tail' are almost always sourced from suppliers
in real time and as and when the customer places an order.
Building Infrastructure for Operations-
The Company has 4 offices in 4 metros cities with more than 500 employees. Warehouses of
the company are located in 7 cities including the metros. Company has tie-ups with more
than 15 courier companies like Blue Dart, First Flight etc. to deliver their products and Indian
post for areas where courier do not reach.
The Process of Supply Chain-
The first step in buying the products like books online from the site by making
payments using payments options like credit/debit card, cash-on-delivery, net banking,
cheque/DD and money order and enter the phone number and address where the items
need to be delivered.
Depending on items purchased they are packed and shipped accordingly for example mobile
phones and books are packed differently as per requirement and also all items have transit
insurance against theft and damages that may be caused while they are in transit. Flipkart
bears the cost of delivery and this make them give a reason/motivator for improving
efficiency at every point of supply chain. This also makes them differentiate from their
Now for delivering the items depending upon the area where the item need to be delivered
either courier, Indian post or own internal logistics arm is used. The delivery time varies
between less than 24 hours and 3 weeks depending on the location and availability of the
product like the products which are imported take 3 weeks’ time to get delivered to the
The inter-city, trans-zone deliveries are made using air cargo. For satellite cities and others
in close proximity, products are transported overnight by train or truck.
For the local parts of the cities where the warehouses of the company exist products are
delivered using two-wheelers, bicycles, or on foot depending upon the proximity of the
place and because of this many of the deliveries are made within a day of the order being

made. All the Team Members have been trained to work efficiently to meet customer
Use of Information system:
The Company use sales to predict the inventory levels. The warehouses are split into
multiple areas — inventory, packing, shipping and so on. The stocks are replenished every
24-48 hours. In the Back End, Flipkart stores details of all the transactions that need to be
carried out. They have an understanding with their associates for order tracking,
reconciliation and MIS (Management Information Systems) reports. The private courier
companies in turn have their own ways of tracking every package. The customer is also
updated about the status of his shipment via message, email or through the website.

When the product needs to be returned then due to the companies understanding with the
courier companies it happens without any disputes or problems efficiently. “Flipkart takes
care of the after-sales needs of its customers with regard to delivery of an item or
addressing grievances including delayed delivery by the logistics partner, or addressing
issues when an incorrect product is delivered. In the case of electronics, warranty and after-
sales service is largely the responsibility of the manufacturer. Flipkart does however
facilitate interaction between the customer and manufacturer/service center as and when
the need arises.”


Order Processing at Flipkart


Order Download in OMS:
Order is placed by the customer from the front-end (web store) which is then downloaded
into an order management system (OMS). This OMS can be a part of your web-store or it
can be a back-end Enterprise system where the customer order gets downloaded.

Inventory Allocation:
As soon as the order flows into an OMS, the inventory from the Warehouse gets allocated to
the order quantity. Thus the free quantity of that particular SKU (product) is decreased by
the order quantity.

Order Picking:
The operations/fulfillment team then start processing the order in the warehouse. First a
picklist is generated against that order (usually its for multiple orders at one go and using
wave management) and is handed over to a picker in the warehouse to pick that SKU from
the bin/rack (in a zone). The picker picks that SKU from the location mentioned in the
picklist and bring it back to the picking station (a stage location)

Order Packing and generation of labels:
After the picking is done, the next stage is packing. At the time of packing required
documents are printed that needs to be send along with the shipment package to the
customer. The order is then packed in a packing box and reports like Invoice, Shipping label
are printed and kept along with the shipment.

Order shipment:
After the order is packed, it needs to be shipped out to the customer. The order gets
assigned with the courier as per the shipping location (usually either at the time of order
placement or at the time of packing) and a manifest is generated. Then the shipment is
handed over to the courier guy who comes to the warehouse to pick up the shipment. Once
the shipment is out of the warehouse the inventory gets reduced in the system.

Shipment Delivered:
The shipment then gets delivered to the respected customer and the courier company
updates the delivery details back to the company whose consignment it was shipping. There
can also be the case of customer return or return to origin due to customer unavailability
which I am not discussing here.

The scenario discussed above is an ideal scenario where the inventory is stocked in the
Warehouse. There can be other 2-3 possibilities where the inventory is not stocked in the
warehouse, such as:

1. Back to back order fulfillment: In this case the operations download the orders and ask
its runner to go to the vendor immediately and pick up the required SKUs from the vendor
and bring it back to the fulfillment center to fulfill the order.

2. Drop shipment: In this case the orders are downloaded and handed over to the vendor
directly to fulfill the orders and ship it to the customers. The warehouse doesn't have any
control over this fulfillment.
3. Made to order: In this case, the orders are first taken from the customer and then the
purchase order is raised to procure the SKUs of that order from the vendor. Once the SKUs
are in the warehouse, the normal fulfillment cycle (as described above in detail) is followed
to process the order.

Flipkart usually does the stocking model or the back to back order fulfillment model.


Future for E-Commerce

India has 11 million online customers now which will increase to 30 million by 2015 which
shows that the e-commerce industry with the increased internet penetration will be the
service sector's growth engine in India. The industry's size is expected to increase to $11.8 b.
Among the challenges faced by the industry is its dependency on the service providers like
suppliers, logistics service providers, etc. whose service in not up to the expectation and are
affecting the service of the online companies. To solve this issue efforts are to be made to
educate these service providers the importance of using technology and provide them
incentives to use these technology and shift their focus on to the customers. Seeing the
prospects of growth a lot of new online retailers have come up and there is a price war
going on to attract more and more customers which is putting pressure on the profitability
of the companies so it has become extremely important to manage cost to increase profits
which is only possible by building an efficient backend- a nationwide delivery network,
warehouses , inventory management , logistics, efficient teams to manage all this therefore
supply chain management becomes an important factor on which companies depend to
sustain in this industry. Flipkart obtained funding from Tiger global management in 2010
which is being utilized by the company for strengthening supply chain capacity and
upgrading technology platforms, including automation at warehouses.